US regulator clears Google to acquire DoubleClick

US regulators have cleared Google's $3.1bn (£1.56bn) acquisition of online advertising company DoubleClick, which was being investigated amid concerns about privacy risks.

The Federal Trade Commission voted to refrain from blocking the deal and said that Google and DoubleClick "are not direct competitors in any relevant antitrust market".

However, the deal still faces a challenge by the European Commission's Competition Unit and Google said it would not complete the takeover until it was cleared by the EU. The commission's decision is expected by April 2 next year.

In announcing its decision the FTC expressed concerns about the privacy implications of the merger, but said that could not be considered in its review.

It said in a statement: "As the sole purpose of federal antitrust review of mergers and acquisitions is to identify and remedy transactions that harm competition, the FTC lacks the legal authority to block the transaction on grounds, or require conditions to this transaction, that do not relate to antitrust."

But the FTC also said it will closely watch the two companies and should "Google engage in unlawful tying or other anticompetitive conduct, the commission intends to act quickly".

Google announced its merger agreement with DoubleClick in April as part of a plan to drive its display-ad business by offering a centralised system that gives advertisers and media agencies the ability to manage their search and display-ad campaigns.

DoubleClick uses various techniques to help companies target their ads to specific internet users. Google stores its users' searching habits in a way that can identify them through their Internet Protocol (IP) address and allows companies to target advertising at consumers using particular search terms.

Critics argue that Google and DoubleClick would be able to merge their expansive databases, placing too much personal information in one company's hands.

Microsoft is one such critic. The software giant has gone before Congress in the US, claiming the deal raises antitrust concerns.

The EU's top consumer lobby, the BEUC, has that same concern and yesterday sent a letter to the European Commission warning that the merger would harm European citizens through greater intrusion of privacy.

BEUC wrote: "The Google/DoubleClick merger would harm consumer welfare by creating a structure that almost certainly will be less respectful of user privacy. Post merger, Google will have the ability and incentive to engage in significantly more intrusive user tracking and profiling than exists today.

"There are many ways in which Google, post-merger, could push up prices for advertisers."

BEUC added that the higher prices would most likely be passed onto consumers.